Syrah Faces Execution Risks Despite Capital Raise and Loan Relief Amid Tariff-Driven Market
Syrah Resources has launched a fully underwritten A$70 million equity raising to support its Balama graphite operations and Vidalia Active Anode Material facility, alongside securing a two-year forbearance on its US Department of Energy loan. The company advances commercial qualification of Vidalia AAM amid strong demand and US tariff support.
- Fully underwritten A$70 million equity raising via placement and entitlement offer
- Two-year forbearance agreement on US Department of Energy loan defers US$16 million payments
- Vidalia AAM facility progressing commercial qualification with tier 1 customers
- Balama graphite production ramping up with strong ex-China market demand
- AustralianSuper to increase shareholding up to 39.3% post equity raising
Equity Raising to Strengthen Financial Position
Syrah Resources Limited (ASX – SYR) has announced a fully underwritten equity raising targeting approximately A$70 million (US$46 million) through a combination of an institutional placement and an accelerated non-renounceable entitlement offer. The capital raise is designed to bolster the company’s liquidity and fund operations at its Balama Graphite Operation in Mozambique and the Vidalia Active Anode Material (AAM) facility in the United States.
The equity raising will issue roughly 269 million new shares at A$0.26 each, representing a 26.8% discount to the theoretical ex-rights price and a 31.6% discount to the last closing price. AustralianSuper has committed to take up its full entitlement and sub-underwrite up to A$30 million, potentially increasing its stake in Syrah to between 30.5% and 39.3%.
Loan Forbearance and Waivers Provide Operational Breathing Room
Syrah has secured a two-year forbearance agreement with the US Department of Energy (DOE) on its loan facility, deferring approximately US$16 million in principal and interest payments until the loan maturity in 2032. This arrangement includes a modest increase in the interest rate and is contingent on maintaining certain cash reserves and meeting covenants.
Additionally, the US Development Finance Corporation (DFC) has extended waivers on events of default related to the Balama operations blockade and financial conditions, with further loan disbursements planned subject to conditions and a loan restructure expected in the third quarter of 2025. These measures collectively support Syrah’s pathway to sustainable cash flow and operational stability.
Operational Progress and Market Dynamics
Production at the Balama Graphite Operation has recommenced, with shipments underway to ex-China markets amid ongoing global supply disruptions. The company is targeting a production campaign of 25-30 kilotonnes of natural graphite, supported by strong demand, particularly from regions outside China.
At Vidalia, Syrah is advancing the commercial qualification of its 11.25ktpa AAM facility with multiple tier 1 customers. The AAM produced meets contractual and target specifications, including purity and performance metrics. While commercial sales are expected to commence within the year, the timing remains dependent on customer qualification progress and market conditions.
Syrah’s strategic positioning benefits from a suite of US import tariffs on Chinese graphite and AAM products, including antidumping and countervailing duties, which enhance the competitiveness of Vidalia and Balama products in the US market. The company is also aligned with US national security and critical minerals objectives, underpinning continued government support.
Risks and Outlook
Despite these positive developments, Syrah faces several risks including the ongoing qualification of Vidalia AAM products, potential termination of its offtake agreement with Tesla, and the conditional nature of further DFC loan disbursements. Market price volatility, operational challenges, and geopolitical uncertainties also present ongoing challenges.
Syrah’s management remains focused on optimising commercial positioning, securing additional offtake agreements, and advancing the planned expansion of Vidalia’s production capacity to 45ktpa, contingent on customer and financing commitments.
Bottom Line?
Syrah’s capital raise and loan forbearance provide critical runway as it navigates commercial milestones and geopolitical headwinds in the evolving graphite and battery materials market.
Questions in the middle?
- Will Syrah successfully resolve the Tesla offtake agreement dispute and secure commercial sales at Vidalia?
- How will the evolving US tariff regime and geopolitical tensions impact Syrah’s market access and pricing?
- Can Syrah secure the necessary financing and customer commitments to proceed with Vidalia’s 45ktpa expansion?
